Financial dispute resolution can take place in court, or privately.
What is a financial dispute resolution (FDR) hearing?
If a separating couple are resolving their matrimonial finances through court proceedings, the FDR is normally the second court hearing that they will attend.
It comes after the first appointment (where directions have been made to progress the matter and identify / quantify the matrimonial assets) and the purpose is to try to narrow the issues in dispute and ultimately reach an agreement in terms of the division of the matrimonial assets.
It is a without prejudice hearing, allowing the parties to freely negotiate a binding financial settlement with the input and assistance of a family judge. The parties do not usually give evidence; the judge will hear from their legal representatives and review all relevant information (including without prejudice offers made by each side) and thereafter assist the parties in reaching an agreement.
The judge cannot impose a decision on the parties but can indicate what they would order at a subsequent final hearing. The judge who conducts the FDR can have no further role in the case if it proceeds to a final hearing, as they will have been privy to without prejudice discussions.
What is a private FDR?
A private FDR is exactly as it sounds. It follows the same ethos of an FDR hearing but takes place outside the court process. The former President of the Family Division, Sir James Munby described them as follows:
‘A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. No additional qualification is required. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR.’
The process for a private FDR is as follows:
- If court proceedings are ongoing, the parties will agree to either adjourn the proceedings whilst the private FDR takes place or agree that a short case management / directions hearing be listed on a date following the anticipated private FDR, which can be vacated if an agreement is reached.
- Both parties select the judge (who will be a financial remedies specialist with considerable and appropriate experience). This is usually a solicitor, barrister or retired judge.
- Both parties will also select the date and the venue of the hearing. The venue will be out of court such as a conference room at one party’s solicitor’s office or it can take place remotely.
- At the private FDR, the selected judge will have read the relevant papers or bundle prepared for the hearing and will have the entire day dedicated to assisting with the matter.
An important point to note is that a private FDR can take place without the need for ongoing court proceedings and may therefore be a useful tool in reaching an early resolution in appropriate cases.
If an agreement can be reached at the private FDR, this will be set out in a formal court order which is drafted, agreed by the parties and then filed at court for a judge’s approval. If an agreement cannot be reached at the private FDR, and there are ongoing court proceedings, the case will return to the court process and will move forward towards a final hearing.
Whilst private FDRs are not applicable to every case, it is suitable to couples as follows:
- Where parties would prefer to negotiate in private, outside of the courtroom.
- Where there are complex issues involved and the parties want to ensure the selected judge is sufficiently experienced in that area and has had time to consider the relevant papers.
- Where both parties seem far apart in their position, but they are still open to reach a mutually agreed financial settlement without the need for the court’s input. In these circumstances, expert input of a neutral third party can be useful in bringing the sides closer together.
- Where negotiations have come to a halt, paying for a private FDR judge and attending the hearing can help parties focus on the objective of reaching a fair settlement.
Advantages of private FDR
The main advantages of private FDR are as follows:
- Flexibility - private FDR’s offer greater flexibility to parties in terms of issues to be guided on and the progress of the case such as preparation for the hearing and at the private FDR itself. The parties can select the location and time of the hearing. Some private FDRs take place in the evenings or on weekends.
- Case focused – a private FDR judge is entirely focused on the specific case meaning that there is more time for negotiations which increases the prospect of reaching an agreement.
- High chance of success – both parties are more likely to attend the private FDR with motivation to reach an agreement as it is a voluntary hearing, as opposed to a compulsory one at court.
- Less delays – the family courts are still dealing with a backlog of cases following the Covid-19 pandemic so are busy dealing with lots of cases which can mean that it might be months before the FDR hearing is listed. A private FDR can fast-track this process.
- Choice of judge – parties can agree the identity of the private FDR judge. Therefore, depending on the complexity and issues in the case, a judge with particular knowledge or expertise can be appointed to assist.
Disadvantages of a private FDR
Whilst there are many advantages to having a private FDR, there are some potential disadvantages and / or situations where it may not be appropriate:
- A private FDR may not be appropriate if one party is refusing to provide full and frank disclosure, as this will be required to ensure an effective hearing can take place.
- The selected private FDR judge is not able to make any orders or directions. They cannot deal with case management decisions if an agreement cannot be reached, nor can they make a final order at the conclusion of the hearing.
- There is the additional cost of the private FDR judge’s fees which the parties would not need to pay for a court hearing. These costs are usually shared between the parties, however.
Rate of success with a private FDR
As alluded to above, private FDR hearings appear to have a higher success rate in achieving settlement. Anecdotal evidence suggests this could be as high as 80-90%.
The greater level of control the parties have over these hearings is a driving factor in terms of their success. An environment can be created where both parties feel comfortable and reassured by the hand-selected judge who is on hand to offer their expert opinion about the case. Furthermore, the fact the parties have agreed and invested in the private FDR process signifies a voluntary seat at the negotiating table, thus promoting a committed and collaborative approach.
If you would like more information about the court process and private FDRs, please contact Richard Rigg in our Family Team.
